Four people have been criminally charged for their alleged involvement in a coordinated “pump and dump” scheme following an Australian Securities and Investments Commission (ASIC) investigation.
Syed Yusuf, Larissa Quinlan, Emma Summer, and Kurt Stuart were charged in the Downing Centre Local Court with conspiracy to commit market rigging and false trading by artificially inflating the price of Australian shares before dumping them.
They have also been charged with dealing with the proceeds of crime in relation to the money that they each obtained from selling the shares subject of the pump and dump activity.
They face a maximum penalty of 15 years’ imprisonment and a fine of over $1 million for market manipulation.
According to ASIC, the defendants formed a private group on the Telegram app where they discussed and selected penny stocks to announce to the public Telegram group named the “ASX Pump and Dump Group”.
Nine announcements were made to the “ASX Pump and Dump Group” over three weeks in September 2021 to boost the selected stocks.
ASIC warned traders in a Telegram share market chat room the following month that they may be breaking the law by seeking to organise stock price manipulation.
It is understood the defendants allegedly purchased some or all of the stocks with the intention to “pump” the share price to an artificial target and then sell them once the price of the stock had substantially increased.
“Market manipulation is illegal. Pump and dump schemes are a form of financial fraud, eroding investor wealth, threatening the integrity of our markets and potentially the Australian economy more broadly,” said ASIC chair Joe Longo.
“Upholding the integrity of our Australia’s financial markets is a priority for ASIC.
“ASIC monitors the cleanliness of our markets, and we take decisive action to disrupt activities that may impact cleanliness. This is why we took the action of entering social media forums and posting directly to issue warnings to members that their actions may be in breach of the law.”
He added that coordinated attempts to manipulate the market remain a criminal offence.
The matter is being prosecuted by the Commonwealth Director of Public Prosecutions after a referral from ASIC in December 2022.
It has been adjourned to 30 July 2024 for a detention application to be made in respect of each of the defendants.
They are charged with dealing with the proceeds of crime in relation to the money that they each obtained from selling the shares subject of the pump and dump activity pursuant to s 400.4(1) of the Criminal Code, and conspiracy to commit market rigging and false trading, pursuant to s 11.5(1) of the Criminal Code (Cth) and s 1041B(1)(b) of the Corporations Act 2001 (Cth).
